In trying to justify tax increases on oil companies, politicians like to use big numbers. They talk about our worldwide earnings, which we reported last week were $10.7 billion during the first quarter of 2011.
They do that to make the case that we shouldn’t receive economy-wide tax deductions, such as one I’ve written about before that’s in place to support manufacturing jobs in the United States, or another that prevents U.S. companies from paying double taxation on income earned outside the country.
Their argument is that because we had strong worldwide earnings, that we’re somehow not paying our fair share of taxes.
Well, let me give you some quick numbers to help you decide.
Here’s a number you won’t hear in Washington: During the first quarter, on those U.S. earnings of $2.6 billion, we incurred tax expenses in the United States of $3.1 billion. That’s right – our U.S. tax bill was higher than our U.S. earnings.
That includes income taxes, sales-based taxes and others such as property taxes. But it doesn’t include royalties or lease payments we pay to the government to produce oil and gas on government-controlled lands, which would make the government’s take from our operations even bigger.
Another number you won’t hear in Washington, which also puts our earnings into context, is our earnings relative to our sales. During the quarter, we made about 9 cents for every dollar of sales, which is about average for U.S. industries. We earned $10.7 billion in worldwide earnings on worldwide sales of $114 billion. That’s about half (or less) of what companies in pharmaceuticals or computers make, just to name a few. But strangely, there’s not much talk about reducing their tax deductions.
Here are a few more numbers to consider.
In 2010, our total tax expenses in the United States were $9.8 billion, which includes an income tax expense of more than $1.6 billion. That $9.8 billion in taxes exceeded our 2010 U.S. operating earnings of $7.5 billion.
And over the past five years, we incurred a total U.S. tax expense of almost $59 billion, which was $18 billion more than we earned from our U.S. operations during the same period.
I’ve said it before, but I’ll say it again: Increasing taxes on U.S.-based oil and gas companies only helps our international competitors. At a time when ensuring the competitiveness of U.S. industry is so critical, it’s hard to believe that lawmakers would seek to give foreign energy companies an advantage over American-owned companies.
As these numbers show, claims that ExxonMobil isn’t paying its fair share of taxes are false – as are any claims that Americans don’t benefit from the global operations of U.S. oil companies.
Many of the people employed by the U.S. oil and natural gas industry – from engineers to contractors to executive assistants – support overseas projects. Without them, many of these jobs wouldn’t exist. And as I’ve mentioned before, U.S. shareholders are one of the largest beneficiaries of a U.S. oil and natural gas company’s international portfolio.
The bottom line is that Americans benefit both from ExxonMobil’s U.S. and global operations in the form of taxes, jobs and shareholder returns.
We’re paying our fair share of taxes. It’s time we had a fair discussion of energy and tax policy – based on the facts.